Chinese Manufacturers/Exporters having major debt issues

by DGlatt6969

I will start off with this. There aware of many small to mid size North American importers/manufacturers who have been offered shares of companies in China, to keep ordering, or to help finance debt. They are using their product to encourage it, by saying they will have to shut down and you will not get your products

As I am sure all of you know the last 19 months have seen some severe shipping issues. Not only has Covid slowed things, but Suarez Canal, Texas storm, Wildfires around the world, among other things have had major effects. This has led to massive price increases in shipping and containers. The shipping companies realized people will continue to pay more and are still raising the prices constantly.

Once these containers are ordered, these shipping companies whom often overbook, can reject the containers at the dock. They sit at the port for a long period of time and are charged a storage fee until they are shipped out.

On the receiving end, there is a backlog of ships everywhere. These ships are also getting charged for having to sit in ports or in the water waiting to be unloaded.

Now when the product finally gets there, many of these seasonal products may already be too late. The importer needs to pay for storage for a year to keep them.

These companies are all incurring massive costs, and these rising prices will not stop next year, as many standard products have been much more expensive to import than usual.

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Back to the Chinese companies. They were already in debt. But now we need to follow this backwards. Nobody pays until they receive the material.

The store doesn’t pay the importer. Order comes late ? They may cancel, especially if it’s seasonal.

The importer cannot afford to pay the exporter as his order his cancelled, and the insane shipping costs have left him dry. They also may not be able to order more as they will have money tied up for a long time now putting products into storage, or waiting for them.

Now the exporters aren’t selling as much, or aren’t getting paid. And their debt is compounding. So they start asking their importers for money. “If we go out of business, you have no business.”

Those of you in any part of this industry may already see it. If anyone has had any similar experiences please share.

TLDR; Shipping prices are so high and delays are so bad that Chinese manufacturers are not getting paid and their already bad debt is worse.


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